Donations tax question

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chopsky

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Yo!

Question for those in the know...

If a person (foreign) purchases a UK property for a South African resident, do they need to pay SARS a % as donations tax?

Cheers!
 
chopsky said:
Yo!

Question for those in the know...

If a person (foreign) purchases a UK property for a South African resident, do they need to pay SARS a % as donations tax?

Cheers!
Click to expand...
There is no donations tax on foreigners. They can donate a gazillion bucks to you and SARS won't touch any of it.
 
Even if the donor were local, if they don't pay the tax then the recipient is automatically liable to SARS.
 
I see on SARS website:

Who is liable for donations tax?​

Donations tax applies to any person (for example: individual, company or a Trust) that is a resident. Hence, non-residents are not liable for donations tax.
 
chopsky said:
I see on SARS website:

Who is liable for donations tax?​

Donations tax applies to any person (for example: individual, company or a Trust) that is a resident. Hence, non-residents are not liable for donations tax.
Click to expand...
Yes, but the way I understand it, either the donor pays the tax, or the recipient does. We had this issue when wifey wanted to buy a house for her friend, and neither of them had bothered to do any research wrt tax implications.

Obviously in this case SARS can't get to the donor, but I'm assuming that the recipient is tax resident here, so I think he will be liable for it.
 
Naks said:
Yes, but the way I understand it, either the donor pays the tax, or the recipient does. We had this issue when wifey wanted to buy a house for her friend, and neither of them had bothered to do any research wrt tax implications.

Obviously in this case SARS can't get to the donor, but I'm assuming that the recipient is tax resident here, so I think he will be liable for it.
Click to expand...
Based on what I'm reading, it appears the donor pays the tax.
 
Naks said:
Yes, but the way I understand it, either the donor pays the tax, or the recipient does. We had this issue when wifey wanted to buy a house for her friend, and neither of them had bothered to do any research wrt tax implications.

Obviously in this case SARS can't get to the donor, but I'm assuming that the recipient is tax resident here, so I think he will be liable for it.
Click to expand...
No, the tax is only triggered if the donation is made by a resident.

Non-resident can donate as much as they want but won’t pay tax. In this case the recipient is also not liable for tax.

BUT: the donation cannot be structured as a regular income (like a salary or stipend), in such a case the recipient will be liable for taxes as if it were an income.
 
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Ok I stand corrected.

Also, there is no Donations Tax payable on donations from a foreign resident to a South African resident, as long as the funds donated are from a foreign source (i.e. from work your sister has performed in the UK).
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www.taxtim.com

Donation Tax - All you need to know | TaxTim SA

Do your Tax Returns Quickly and Easily with TaxTim Today! TaxTim is your Friendly Online Tax Assistant - Do your Tax Return Right for Maximum Refund.
www.taxtim.com www.taxtim.com

You do need to declare it still, under "amounts considered non-taxable."
 
chopsky said:
Yo!

Question for those in the know...

If a person (foreign) purchases a UK property for a South African resident, do they need to pay SARS a % as donations tax?

Cheers!
Click to expand...
Sars by the looks of it no... But don't discount the HMRS that's side.
 
Which country does the foreigner who is sending the money live? There are similar rules in many countries, so for example as a US resident, if I give money to someone in SA in excess of a specific threshold, I have to pay something similar to a donations tax (specifically, the excess amount gets subtracted from my tax-free estate credit upon death).

So although the SARS policy looks like nobody pays, it’s actually delegating the payment to the sender’s country’s policy.
 
UK rules
As of 2023/24, you’re entitled to an annual tax-free gift allowance of £3,000. This is also known as your annual exemption. With your annual gift allowance, you can give away assets or money up to a total of £3,000 without them being added to the value of your estate.

If you don’t use your full gift allowance in one year, you’re allowed to roll it over to the following year. You’re only allowed to do this once, so you couldn’t roll any allowance you haven’t used over for a second year.

Once you’ve exceeded your annual tax-free gift allowance, the gifts you give may be subject to inheritance tax in the event of your death. However, this only applies if you die within seven years of giving a gift (more on this later). If you live for longer than seven years after giving the gift, no tax is payable (unless it’s part of a trust).
 
Sinbad said:
UK rules
As of 2023/24, you’re entitled to an annual tax-free gift allowance of £3,000. This is also known as your annual exemption. With your annual gift allowance, you can give away assets or money up to a total of £3,000 without them being added to the value of your estate.

If you don’t use your full gift allowance in one year, you’re allowed to roll it over to the following year. You’re only allowed to do this once, so you couldn’t roll any allowance you haven’t used over for a second year.

Once you’ve exceeded your annual tax-free gift allowance, the gifts you give may be subject to inheritance tax in the event of your death. However, this only applies if you die within seven years of giving a gift (more on this later). If you live for longer than seven years after giving the gift, no tax is payable (unless it’s part of a trust).
Click to expand...
This
 
Sinbad said:
UK rules
As of 2023/24, you’re entitled to an annual tax-free gift allowance of £3,000. This is also known as your annual exemption. With your annual gift allowance, you can give away assets or money up to a total of £3,000 without them being added to the value of your estate.

If you don’t use your full gift allowance in one year, you’re allowed to roll it over to the following year. You’re only allowed to do this once, so you couldn’t roll any allowance you haven’t used over for a second year.

Once you’ve exceeded your annual tax-free gift allowance, the gifts you give may be subject to inheritance tax in the event of your death. However, this only applies if you die within seven years of giving a gift (more on this later). If you live for longer than seven years after giving the gift, no tax is payable (unless it’s part of a trust).
Click to expand...

Inheritance tax only applies to gifts given by UK residents. If for example, the donor lives in Australia (no inheritance tax), gives a gift to someone living in the UK, they are not liable for inheritance tax.
 
chopsky said:
Inheritance tax only applies to gifts given by UK residents. If for example, the donor lives in Australia (no inheritance tax), gives a gift to someone living in the UK, they are not liable for inheritance tax.
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with this response here its clear that you should rather get proper advice especially if its at the level of a house.

Because aus tax may apply now >_<
 
chopsky said:
Inheritance tax only applies to gifts given by UK residents. If for example, the donor lives in Australia (no inheritance tax), gives a gift to someone living in the UK, they are not liable for inheritance tax.
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So someone in Aus wants to buy someone in SA a house in the UK?

man, I need friends/family like this.
 
chopsky said:
Yo!

Question for those in the know...

If a person (foreign) purchases a UK property for a South African resident, do they need to pay SARS a % as donations tax?

Cheers!
Click to expand...
Yes they may have to pay UK donations tax (not sure if they have but I am sure). Otherwise it can be seen as money laundering or a bribe.

It depends why they buy you a house, and what your connection is. But looking at it, it will raise a lot of red flags.
 
chopsky said:
Inheritance tax only applies to gifts given by UK residents. If for example, the donor lives in Australia (no inheritance tax), gives a gift to someone living in the UK, they are not liable for inheritance tax.
Click to expand...
The estate normally pays the inheritance tax, and the transfer duty etc.

So if you leave a house to someone here, the estate has to pay the tax, transfer duty etc. Only then can the rest be divided with the heirs.
 
Speedster said:
There is no donations tax on foreigners. They can donate a gazillion bucks to you and SARS won't touch any of it.
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Only if they are non-resident. If they have residency here, they will be paying tax. Its based on your residency and not your citizenship.
 
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